Monthly Archives: February 2010

Have you ever seen a Black Swan? I had to go out and Google it to see if they really exist. They do. All the other swans that I have seen were white. When someone mentions swans I think of white ones. It was a common expression in the early U.K. as a statement that describes an impossibility, from the old world presumption that “all swans must be white”, because all historical records of swans reported that they had white feathers. The Idea of a Black swan was outside my initial perception set. I guess it shouldn’t have been. If we can have white (albino) tigers, why can’t we have Black Swans?

So what?

A gentleman by the name of Nassim Nicholas Taleb wrote a book in 2007, by the name of The Black Swan.Taleb asserted, “What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability.” He goes further to state “A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives.”

I think we need to apply this theory to business. In looking at the various corporate cultures and methods of business conduct that I have been associated with, I see many, many white swans. When I look back at the various roles I have had throughout my career, I find that I was my most successful when I decided to operate outside what was then the expected norm and go my own new/different way. I had my highest impact on the organization, and I was my most successful.

In today’s unpredictable business market it may seem risky to operate outside of the expected norm. After all, the Chinese proverb is “The nail that sticks its head up gets pounded down.” On the other hand, as businesses today strive for cost reduction and profitability improvement they are finding that they don’t need as many white swans in the labor flock. In this day and age I think I would rather be regarded as “High – Impact” and “Rare” than be regarded as just another member of a flock that is being reduced.

It is very easy to fall into the trap of being very good at one thing. You start with a successful sale. You follow it up with a similarly applied successful sale, then another, and so on. Soon you have what you feel is the “recipe” for your product/service and a market. The key item to be aware of here is “a”, as in singular market.

Being very good at one thing is great while that market is good, but no market is good forever. You need to make sure you are diversified in your revenue sources.

I am in the communications and technology industry. It has been a rollercoaster ride for over a decade. Companies have flared up very large by taking advantage of the various technologies and needs bubbles, only to almost disappear completely when that particular market bubble bursts.

Good rules of thumb are to focus on the needs and uses of the end users of your product or service. This means you must potentially have to “see through” your customer, to their customer, if you are not dealing directly with the final end user of your product or service. As the communications industry learned in a very painful way, it was not the network that drove the end user; it was the end user that drove the network.

Examples of revenue diversification can include understanding the various demographics and needs within the market and grouping like ones as targets. This would be an example of vertical market definitions and diversification. Markets such as “Governments”, “Financial Entities”, “Education” and “Manufacturing” are good examples. That way you diversify yourself into specific markets that hopefully do not move fully in coordination with each other.

Another methodology is to move into complementary goods and services. If you are an equipment or product provider you may want to look at moving into providing services that are associated with your product. That way when customer capital expenditures are reduced, you can still generate revenue from the service associated with your product.

It sounds simple, and it sounds like common sense, but it seems that all too often in the heat of the drive for ever increasing revenues, we end up focusing only on what we have done well before, and not on other potentially unfamiliar markets that we should do well on in the future.

We have all been in the position where an unexpected issue arises. It can be a product capability shortfall, or a process application mismatch, or just about anything in between.Our first impulse is to find a “work around”. Something quick and dirty that will get the job done and allow us to move on. We have all done it.

The problem with this approach is that it requires two “fixes”: the initial “work around” and then the revisit of the issue to put in the correct long term change. The “work around” allows us to stay with the existing process or capability, when by the very nature of the need, we are seeing that we need to change. In today’s short resource, profitability and resource challenged environment, the “work around” has become too expensive.

The normal issue with a “work around” is that since it is working, we never seem to get around to implementing the correct long term solution. Change doesn’t (need) to occur and the “quick and dirty (re: inefficient) becomes the accepted process. It becomes the standard by default and gets (re)coded into the process going forward. The quick and dirty has solved a short term need, but has not generated the needed change to achieve long term efficiency and profitability.

In today’s economy when you encounter an issue, more often then not the correct course of action is to implement the long term fix – make the change. It may take a little longer than the quick and dirty fix to the existing system, but the end result is a cleaner, longer term solution. The business also ends up stronger, more efficient and more profitable.